Albert Einstein visualized when he said, “The only source of knowledge is experience.” Outsourcing has become a guiding light for businesses looking for experienced teams in this dynamic business world. 

With the arrival of the Covid-19 pandemic, outsourcing adoption has further accelerated. This situation enabled organizations to embrace the benefits of global outsourcing. Global outsourcing allowed companies to adapt, utilizing the expertise of external parties. 

In the realm of business strategies, outsourcing continues to thrive and shape the global landscape in 2024. This blog post will discuss recent outsourcing statistics on worldwide outsourcing and its role in today’s hectic marketplace. Read until the end to find new opportunities and challenges for businesses using this powerful strategic tool.

Global Outsourcing Trends and Market Size

Current state of the global outsourcing industry

According to research and market reports, the global market for outsourcing services was valued at US$620.381 billion in 2020. It will expand at a compounded annual growth rate (CAGR) of 5.54% during the forecast period. This will result in a total market size of US$904.948 billion by 2027. 

The current state of the global outsourcing industry is like an active ecosystem buzzing with innovation. It has surpassed geographical boundaries, transforming into an influential factor driving business growth.  

Growth and trends in outsourcing over the years

Over the years, the growth and trends in outsourcing changed the business landscape. Here’s a summary highlighting latest trends: 

  • Hiring Skilled Talent: A survey by ManpowerGroup in 2022 shows that 75% of employers in the US need help with finding suitable talent. They feel there is a need for more individuals with specialized skills in new technology. Due to the long process of recruitment, companies outsource services to save time. This allows them to gain access to the expertise that they lack in-house. 
  • Use of Modern Technology: Technological advancements have transformed the outsourcing industry. Automation, artificial intelligence, and cloud computing have revamped processes. It has improved productivity and opportunities for collaboration between clients and service providers.
  • Rise of Remote Work: The pandemic has affected corporate life a lot. The remote work or hybrid model has become the new approach to work. A survey by the Pew Research Center in February 2023 states 35% of workers in the US work from home. This is a slight decrease from January 2022 data which showed 46%. Yet, remote work gets preference from most organizations.
  • Flexible Engagement Models: Engagement models have become more flexible to suit business needs. From project-based to long-term contracts, businesses can choose the model that meets their requirements. This is the way of fostering collaboration and continuity.
  • Focus on Data Security: Data security has become critical in outsourcing any service. Nowadays, offshore companies use robust security measures and compliance protocols to protect data. This allows them to maintain the client’s trust in them.

Also read: 10 Steps Approach to Successful Outsourcing Strategy

Major countries dominating the outsourcing market

Major countries dominating the outsourcing market
  • India: Located in the heart of South Asia, India is now known as the “Outsourcing Capital of the World.” It is Popular for its large pool of skilled professionals and talented candidates. India excels in IT services, software development, customer support, and back-office operations. 
  • Philippines: The Philippines continues attracting companies seeking cost-effective, high-quality outsourcing solutions. It has a cultural connection to Western countries and strong government support. It is a hub for business process outsourcing (BPO), call centers, and knowledge-based services. 
  • Southeast Asia: Southeast Asian countries are strong contenders in the outsourcing industry. Malaysia, Vietnam, and Thailand are popular for their services. They specialize in IT outsourcing, business support functions, and digital marketing. This makes them a unique destination attracting both regional and international clients.
  • China: China has become a major player in the outsourcing industry, particularly manufacturing. Renowned for its efficient and cost-effective production capabilities and unparalleled supply chain management expertise, China has emerged as the destination for companies seeking to optimize production and access the world’s most extensive consumer market. 
  • Eastern Europe: The countries of Eastern Europe saw a rapid rise in outsourcing activities. Known for its expertise in software development and IT services, it attracts clients worldwide. Poland, Ukraine, and Romania offer high-quality solutions coupled with cost advantages. 

Benefits of Outsourcing 

Did you note why companies are outsourcing their work to places like India? Sometimes it is better to change the old business plans to grow your business. It’s all about saving money and getting quality work done by an offshore partner. But what benefits can your offshore partner provide to your company? Let’s discuss it. 

  • It saves you from unnecessary expenses: It is one of the prime reasons major companies outsource their work. And there is nothing wrong with that. Every business looks forward to getting the job done at a low cost with the best skill. Outsourcing fits this criterion well. It helps businesses to spend less on non-essential resources and infrastructure. 
  • It gives you skilled assistants: In the present scenario, the companies prefer a candidate with relevant skills. Outsourced candidates are professional and have appropriate expertise in the field. Such candidates utilize their time developing creative and unique methods to complete the work. 
  • It gives you access to advanced technology: The best benefit one can get by outsourcing is access to top-notch technology. The outsourced candidates possess exceptional knowledge of new technology and tools. It can give your work a completely new overview. 
  • It gives you a competitive edge: If you want to stay ahead, looking for employees skilled in using trending software and tools is a good idea. And if you’re a small business owner or startup, you can boost your company’s reputation by hiring outside help for those tasks.

List of Outsourcing Statistics: Industry-Specific

We have compiled an extensive list of outsourcing statistics covering a wide array of industries and regions. Check it out.

IT and Software Development Outsourcing

The global IT outsourcing industry grew by 13% between 2020 and 2021 after a slight decline in 2020. It’s projected to surpass over $500 billion in revenues by 2025.

Report By: Statista Technology Market Outlook

According to this report, it is projected that the IT outsourcing industry will become an outstanding factor in revenue. When comparing revenue on a global scale, the United States is projected to generate the most, with a total of US$156.20 billion by 2023.

IT market outsourcing

IT Services (54%), Finance (44%), and Payroll (32%) are the most frequently outsourced services.

Report By: Deloitte

This report shows an increasing trend toward utilizing remote models influenced by the lessons learned from COVID-19. Models like Shared Services Centers (SSCs) and Global Business Services (GBS)  are adjusting well to the changing geopolitical landscape.

The IT & Telecommunications segment dominated the revenue share of the BPO industry.

Report By:  Grand View Research

This report states that the global market for business process outsourcing was worth USD 261.9 billion in 2022. Experts forecast a growth rate of 9.4% between 2023 and 2030. 

IT and business services organizations spent $7.5 billion in the EMEA region during Q1 of 2022. This involves Europe and the Middle East.

Report By: Computer Weekly

Tech research and advisory company ISG reported that spending on IT and BPO contracts over $5m increased by 21%. It reached a record-breaking $7bn in the region compared to last year.

Customer Service and Call Center Outsourcing

The BPO industry in Japan will generate $38 billion by 2025.

Report By: Statista

According to this report, the BPO market in Japan generated around 4.56 trillion Japanese yen in 2021. It is projected that sales of BPO services in Japan will exceed 5 trillion yen by 2026.

89% of customers make repeat purchases after having a positive consumer experience.

Report By: Salesforce

This survey portrays a view of a dynamic world facing various challenges, including economic, health and climate crises. The barrier between personal and professional lives is becoming blurred. As a result, businesses should adapt to meet evolving customer demands.

Companies providing exceptional customer service can attract consumers willing to spend 17% more.

Report By: American Express

This report states that 81% of Americans are satisfied with the service businesses provide, up from 67% in 2014. 40% have noticed companies making more efforts to improve their services.

27% of small businesses rely on outsourcing for their customer service needs. Around 27% of small enterprises outsource customer service.

Report By: Clutch

According to this report, 90% of small businesses plan to outsource business functions in 2022. This is an increase from 80% in 2021.

Manufacturing and Production Outsourcing

More than 6,600 outsourcing firms are currently operating in China.

Report By: China Business Review

This report shows how the outsourcing industry of China has made incredible progress. It is now on the verge of becoming a dominant force in the worldwide market.

A staggering 70% to 80% of all manufactured products are believed to be outsourced.

Report By: Orient

According to manufacturing outsourcing statistics, companies prefer China for low labor costs. Some also outsource to the United States.

China holds the position of the leading manufacturing powerhouse worldwide.

Report by: Statista

According to the US statistics division, China’s manufacturing output in 2019 amounted to 28.7% of the world’s total. It beats the United States by more than 10 points.

Mobile App Development Outsourcing 

Cloud computing is seen as a crucial factor in the outsourcing strategies of 90% of companies.

Report By: Springer Link

Many businesses aim to focus on cloud technology. Cloud computing has been gaining popularity since the outbreak of COVID-19. Most companies acknowledge adopting cloud computing approaches. But data security issues and other associated risks impede the switch.

Software development is the most common outsourced IT function 

Report By: Statista

According to a 2017 survey, IT leaders worldwide outsource software development. Almost 64% of respondents indicated so.

The IT outsourcing industry in India is predicted to experience a 7.25% CAGR growth by 2025, reaching a value of INR 8,830 billion ($121,335,149.20).

Report By: Business Wire

India holds the top position for IT outsourcing globally, owing to various reasons. A projection is being made that India will have the highest number of software developers by 2023/2024. This will surpass the United States in this domain.

Software outsourcing in Asia is set to show an annual growth rate (CAGR 2023-2027) of 9.16%.  

Report By: Statista

The market volume for IT outsourcing can reach US$136.10bn by 2027, with an annual growth rate in revenue. The projected spend per employee in this segment is US$46.26 in 2023. The US can also generate the highest revenue compared to other countries, with US$156.20bn in 2023.

Finance and Accounting Outsourcing

60% of contracts for outsourcing finance and accounting services are not expected to get renewed.

Report by: Gartner

This report states that many finance and accounting organizations will not renew 60% of their BPO contracts by 2025. This is due to outdated pricing models that fail to promote digitization and process improvement. 

Business process outsourcing accounts for 9% of the Philippines’ GDP.

Report By: Matchboard

The Philippines outsourcing industry is worth $27 million. It employs one million Filipinos, contributing 10% to the country’s economy. Due to a literacy rate of 97% and a low small wage of $300 per month for graduates, the Philippines is a favored location for outsourcing.

Accounting and IT services are the most popular outsourced processes for small businesses. 

Report by: Clutch

It is common for small businesses to outsource certain functions, with accounting and IT services being the most outsourced at 37%. Digital marketing follows behind at 34%, while development, human resources, and customer support are also outsourced at 28%, 24%, and 24%. 

Human Resources Outsourcing

Human resource outsourcing market share will rise by USD 10.90 billion between 2021 and 2026, with a CAGR of 4.87%. 

Report By: Technavio

The global HR outsourcing market will be dominated by a certain continent, with an estimated 56% of its growth between 2022 and 2026 coming from there. Technavio predicts that the market will experience a gradual increase of $10.90 billion from 2021 to 2026.

75% of HR professionals feel their department is working beyond capacity and stretched too thin.

Report By: SHRM

It’s not unexpected that HR departments get overwhelmed nowadays. According to the State of the Workplace Report 2021-2022, almost 75% of HR professionals feel their workload is too much and needs to thin. Additionally, 42% believe they need more dedicated personnel to achieve organizational goals.

Companies can save 27.2% by outsourcing their HR services.

Report By: NAPEO

By hiring professional employer organizations (PEOs), companies can reduce expenses by outsourcing HR functions such as hiring, recruiting, ensuring compliance, and handling unemployment claims. According to a study by NAPEO, the average cost savings from hiring a PEO can result in a 27.2% return on investment.

Legal Process Outsourcing

The market for outsourcing paralegal services has shown significant growth recently, with the global legal process outsourcing market expanding from $11.76 billion in 2022 to $14.81 billion in 2023.

This sector is projected to grow to $38.13 billion by 2027, illustrating a robust compound annual growth rate (CAGR) of approximately 26.7%​.

The India Factor

Did you know that India has been a player in the IT industry since the 80s? It wasn’t until the early 90s that outsourcing to India took off though. Back then, global airlines started outsourcing their back-office tasks to India. 

Soon after, IT companies followed suit. Some of the first big companies in the Indian outsourcing market were Texas Instruments, American Express, Swissair, and British Airways. They all set up shop in India and started providing IT software and tech services. In the present scenario, the industry has developed and is a major player in the world of IT. 

Nowadays, a lot of companies need to outsource to get things done right. They’re always on the lookout for a great place to do it.  In this respect, one country stands out among the rest—India.  It’s a great country to get quality work done at a good price. 

Have you heard of India’s outsourcing growth? It’s pretty huge. Metropolitan cities like Mumbai, Bangalore, and Hyderabad rank among the best destinations for outsourcing companies. India is known for being a top spot for IT outsourcing, and there are plenty of reasons why! 

  • India delivers unmatched quality services at affordable costs with the fastest turnaround time. In this way the work gets finished at night while the client is offline. 
  • Exceptional Customer support is the primary reason why 80% of European and US countries outsource from India. 
  • India’s IT and software development sector is fifth largest in the world. This makes it a favorable destination for IT outsourcing. 
  • India is home to over 1.2 billion people, and 3.1 million graduates enter the job market every year. 
  • India provides candidates at affordable pricing. 

NASSCOM is a top tech industry in India. In their survey, they state reasons why many companies outsource to India. This is because of its large talent pool, cost-effective salaries, and help from the National Association of Software Service Companies.

Outsourcing in the Digital Age

In this day and age, businesses need to keep up with the times and go digital if they want to survive. But it’s not about getting the latest tech and gadgets – sometimes outsourcing can be a big help too. It’s a vital part of digital transformation and can make your life a lot easier. 

By outsourcing certain tasks, you can save money and free up time to focus on other important stuff. Plus, you’ll get to work with other experts and learn new things. So if you’re looking to boost productivity and profits, it’s definitely worth considering! 

The Rise of Digital Outsourcing Models 

You must have noticed how many companies that outsource are using cloud computing and Robotic Process Automation. The global cloud computing market is going to be worth over $1 trillion by 2026. Similarly, the RPA is expected to hit $3 billion by 2024. And it makes sense, right? 

These digital outsourcing models are super flexible, cost-efficient, and secure. Plus, RPA can automate all those boring tasks, so people can focus on more important stuff. It’s no wonder so many organizations are jumping on board with this tech trend. 

Conclusion 

Outsourcing is becoming more and more popular in the business world, and the numbers back it up. Digital outsourcing, like cloud computing and RPA, is especially on the rise. And it’s no wonder why – these approaches are cost-efficient, scalable, and help businesses run smoothly. Outsourced companies can give businesses a leg up over their competition and help them grow. It boosts productivity, innovation, and strategic focus. 

As the world keeps changing, outsourcing remains a powerful tool for businesses to keep up with technology, get specialized help, and optimize their operations. We hope through this blog post you get a clear picture of outsourcing stats

Are you looking for a reliable and professional offshore partner? Consider Invedus for outstanding services. Here we have a team of dedicated virtual assistants who can help you in achieving exceptional results. Connect with us to discuss your project in detail. 

About Yash

Yash is a virtual marketing assistant with a passion for creating content in the digital and IT space. With a keen eye for detail and a knack for communication, Yash has helped numerous clients to enhance their online presence and reach their target audience. When not busy crafting marketing strategies, Yash enjoys staying up-to-date with the latest trends in the world of technology.